Royal Bank of Scotland is winding down its controversial Global Restructuring Group, which is being investigated over allegations that it profited from the financial distress of companies it was meant to help.

Derek Sach, head of GRG, and Aubrey Adams, the unit’s head of property, have both agreed to leave the bank at the end of March 2015.

The changes were announced to the bank’s staff in an internal memo on Friday, according to a person familiar with the situation. RBS declined to comment.

The moves come only weeks after Mr Sach was accused of being “wilfully obtuse” by Andrew Tyrie, the chairman of the parliamentary Treasury committee, for having denied that GRG was a “profit centre”, only for the bank to later admit this was the case.

Mr Tyrie said on Friday: “The important issue here is whether RBS is now - and is seen to be - acting in the long-term interests of its shareholders and SME customers. He added that RBS still had a “long way to go” to improve the way it serves its customers.

GRG, which is being investigated by the Financial Conduct Authority, will be replaced by a new restructuring team that will work alongside the rest of the bank to help distressed clients, rather than operating as a separate unit.

Laura Barlow, former head of GRG’s UK team, will lead the new restructuring division. The person familiar with the decision said: “The improved economic conditions mean there is no longer a need for a standalone unit to deal with distressed clients.”

Ross McEwan, RBS chief executive, said last month there had been a 40 per cent fall in the number of struggling businesses being moved into its restructuring unit in the first six months of the year.

GRG has been accused – notably by Lawrence Tomlinson, adviser to the business secretary Vince Cable – of attempting to profit from the financial distress of these companies. The bank has denied this.

An RBS-commissioned review of GRG published in April by law firm Clifford Chance found no evidence of the bank systemically defrauding its customers and said that it successfully turned round most clients it worked with.

However, RBS said it would make several changes to the way it handles small businesses in distress. These included winding down West Register, its controversial property unit that has bought assets from distressed business clients, because of “a damaging perception that the bank had a conflict of interest”.

The bank, which is the UK’s biggest lender to small businesses, also said it would waive for 90 days the extra 2 per cent “default interest” levied on companies that default on their loans.

GRG has dealt with more than 10,000 struggling small businesses since the financial crisis, as well as large companies such as Samsonite, Thomas Cook and Liverpool Football Club.

Many of the biggest companies in GRG have been shifted into RBS Capital Resolution, the £38bn bad bank set up last year to wind down its most toxic assets.

Sir Andrew Large, the former banker asked by RBS to investigate its treatment of small businesses, said in a report last year that GRG had “potential conflict of interest” because it was a “profit centre” for the bank tasked with extracting what it could from failing customers.

He found that GRG could ask for customers to be transferred to it. This allowed GRG to charge fees, send in consultants that had to be paid for by the business and produce valuations that could result in debt covenants being breached. There was no formal procedure for then returning it to a “normal” relationship.

The winding down of the unit was first reported by the Wall Street Journal.

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